Local Government – Cutting Council Tax when grants and funding are falling

Local Government – Cutting Council Tax when grants and funding are falling

Local Government – Cutting Council Tax when grants and funding are falling

In the second in a series of exclusive articles for Endeavour Public Affairs looking out how local authorities are adapting to cope with increasing demands on their services and reduced funding, Cllr. David Burbage sets out how, in a time when grants and funding to local authorities are falling, his council was able to introduce four years of consecutive tax cuts totaling nine per cent.

David Burbage is a Conservative Party councilor and is the Leader of the Royal Borough of Windsor and Maidenhead.

To follow David Burbage on Twitter – @davidburbage

When I first became a Cabinet Member in 2001, it was as Lead Member for Finance, and also right in the middle of a budget setting cycle.  The senior officers at the time had a long list of budget pressures, which consisted of “Demand Led Social Services” costs, wage inflation, contract inflation, supplies inflation, services inflation, and taking on grant funded activities that no longer had grant funding.

As a newbie, this was all rather scary and by careful negotiation we managed to squeeze the pressures right down to a minimum and ended up in February 2002 only putting Council Tax up by 2.5 per cent. This was the lowest increase that the Council had delivered.  What a success!

But as time went by, I learned that the problem with that first budget I had to deal with was that I did not know enough about the subject matter I was being asked to make decisions upon.

All those pressures – but where were the savings?  When I first asked that question, I received blank looks as if I was speaking in a foreign language.  As a response, I got little offered up.  Some of my colleagues were presented with the (sadly too common elsewhere) unpalatable close-libraries, remove-dog-bins, charge-higher-fees proposals.

With the benefit of experience, it is clear.

Those dependent on state funding will not be offering up reductions in state funding particularly willingly.  It is up to the elected Members, who speak on behalf of residents, taxpayers, who are the people who need to provide leadership and direction, and decision making, to turn the “can’t do” into “can do”.

Taking all those initial pressures; what would I do differently now to what happened then?

Firstly, demand led services. We have actually asked for the evidence of the demand.  How many people are using the services?  What services are they using?  Are they entitled to the services or is it because we provide them that we allocate the service because we have now got the staff and budget available – and do not want to lose either? After finding out about that, we also ask the question on how we are reducing demand – are we using technology and modern systems?  Are we operating efficiently to eliminate unnecessary management structures?

Secondly, wage inflation.  There was a year when the national pay settlement for local government (sounds like a contradiction in terms) was settled halfway through the year it was being awarded in, resulting in an immediate budget pressure and an unfunded outgoing.  We have avoided this by extracting ourselves from the national pay scheme and we now have local control of not just pay, but terms and conditions of service as well.  This has the beneficial effect of allowing us flexibility to set the right contracts and salaries in place to deliver services locally, rather than be bound into a scheme that may be negotiated by political opponents or those with a greater public sector budget ambition than ourselves.

Thirdly, contract inflation. Nowadays, with austerity, unemployment, and a difficult trading environment, it is commonplace for wage freezes in the private sector.  Any contract which has an inflationary uplift on the basis of salaries (which then do not get uprated) is simply printing money for the supplier.  We have negotiated hard with suppliers to extract ourselves from meaningless inflation uplifts and ensure that if mutual costs are not increasing, the taxpayer does not find themselves on the wrong end of an unnecessary bill.

Fourthly, cost of supplies increases.  Procurement has moved on a lot in the last ten years, and with the advance of the internet and global markets, the prices for goods can be accessed easily. Closed “deals” and favouring one supplier over another mostly ends up with a bad price to the consumer.  My own office was given a price for printer toner cartridge that was more than twice the street price.  Yet the product was the same!

Fifthly, grant funded activities.  We are still finding pockets of age-old activity that used to be specifically funded by government but that long ago either ceased or became un-ringfenced.  One prime example is bursary funding for childcare courses.  Local taxpayers funded courses in looking after 0 to 2 year olds, but they were not funding physics, engineering or computing courses.  How will UK plc manage if there is nobody who has the skills or money to employ a childminder in the first place?

In conclusion, there is no silver bullet to cutting taxes, but a political will and determination to succeed are certainly pre-requisites.  There are many who believe that the Council is best placed to spend other people’s money, has to be both the employer and provider of services and that only by preserving and enhancing the “base” will a local authority world manage to keep turning.

Not so!

Published: Monday 11 March 2013

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